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US Fed Reserve signals rate hike in September
The Federal Reserve, America's central bank, has decided not to raise interest rates in June, but signalled that the long-awaited rate hike could come in September as the economic activity picks up.
 
"The committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace," the bank known as the Fed said after a two-day policy meeting of the Federal Open Market Committee.
 
But the committee lowered its projections for economic growth significantly. In March, committee members projected 2015 growth would be between 2.3 percent and 2.7 percent.
 
"When the committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent," it said.
 
Fed "currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the committee views as normal in the longer run," the statement added.
 
Analysts said with the with economy getting on track after six years of recovery from the Great Recession, the central bank believes a Fed rate hike in the coming months would be a healthy sign for the economy.
 
The US economy expanded at a healthy rate of 2.4 percent last year. Policymakers had hoped this year would be even stronger, but the Fed's latest prediction is for 1.8 percent to 2 percent growth.
 
The Fed slashed interest rates to near 0 percent in December 2008 to help rejuvenate the battered economy.
 
The Fed has not actually raised rates in almost a decade and low interest rates and analysts saw little chance of the Fed raising rates at its June meeting.
 
The economy contracted in the first three months of 2015 while inflation and consumer spending remained tepid. Though it regained some momentum in spring, it was not enough to justify a June rate hike.

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Social media usage in rural India up by 100 percent: Report
Usage of social media in rural India has grown by 100 percent during the last one year with 25 million users residing in that belt, a report said here on Wednesday.
 
However, urban India registered a relatively lower growth of 35 percent with the total number of users at 118 million as on April 2015, says the 'Social Media in India 2014' report by the Internet and Mobile Association of India (IAMAI) and Indian Market Research Bureau (IMRB) International.
 
There are 143 million social media users in India as on April 2015. The report stated that the top four metros continue to account for almost half of the social media users in urban India.
 
The report said the largest segment accessing social media consists of the college going students with 34 percent followed by young men at 27 percent.
 
School-going children constitute 12 percent of the social media users. College-going students and young men still form the 60 percent of the social media users in urban India.
 
The report further stated that 61 percent of these users access social media on their mobile device.
 
"The fact that almost two-thirds of the users are already accessing social media through their mobile is a promising sign. With the expected increase in mobile traffic the number of users accessing social media on mobile is only bound to increase," the report added.

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India's largest NBFC gets RBI nod to set up universal bank
India's largest microfinance company Bandhan Financial Services Ltd. (BFSL) on Wednesday received the final nod from the Reserve Bank of India (RBI) to set up a universal bank.
 
BFSL, presently a non-banking financial company (NBFC), is scheduled to kick-start its banking operations on August 23 this year in Kolkata.
 
"Our plan is to open around 500-600 branches across India with a special focus on the east and north-eastern parts of the country. We will be a bank for all, but our primary objective will be to serve the unbanked," the company's director Chandra Shekhar Ghosh said.
 
It has recently completed raising Rs.1,020 crore equity from the International Finance Corporation, Singapore's sovereign wealth fund GIC and the state-run Small Industries Development Bank of India, after which its net worth has gone up to Rs.2,700 crore.
 
The RBI had stipulated a minimum capital base of Rs.500 crore for new banks.
 
Its loan book stands at Rs.10,000 crore.
 
BFSL has appointed 850 experienced banking professionals at senior and middle-level positions to run its operations in addition to the 17,000 employees that the microfinance entity already has.
 
"The bank will specially cater to the need of micro, small and medium enterprise (MSME) and small and medium enterprise (SME) units. We have adequate capital and solid risk management system in place and we will serve everyone with utmost honesty and the highest ethics," he said.
 
After receiving the in-principle license from the country's apex bank in April last year, the company had been working towards transforming itself into a bank -- a task for which it appointed five specialised agencies.
 
Deloitte Touche Tohmatsu India Pvt. Ltd. was selected as the consultant for the banking project while FIS was selected as the information technology partner. 
 
Aon Hewitt was assigned to design the human resources and compensation policy for employees, Madison Media handled the advertising needs and Ogilvy & Mather was appointed to handle the brand-building exercise.
 
BFSL made a humble beginning in 2001 with the idea of "making a significant contribution towards poverty alleviation by empowering women".
 
It is presently registered as a non-banking finance company with RBI and has operations in 22 states with a network of 2,022 branches.

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COMMENTS

R Balakrishnan

1 year ago

A micro finance co will suddenly find itself in an ugly world to collect deposits to run its show. And deal with sophisticated borrowers who are NPAs in disguise. Wonder what prompted a successful microfinance co to get in here? Let us hope that the promoter's spirit and character builds this in to a good bank, with lending being the last priority. Keeping all the deposits in G-Secs itself will give a good spread. No need for fancy loans etc.

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